Definitive Ranking of Commodity Trading Companies

Hadn't seen anything of the sort on WSO, so thought I'd give my 2¢ on the matter. List excludes banks because, well, they're not really that active in the space anymore.

God Tier:
The creme-de-la-creme, the thoroughbreds, the blue-blooded elite...
- Trafigura
- Glencore
- Vitol

Demi-God Tier:
Mostly majors with powerful trading arms...
- BP
- Shell
- Phibro (formerly of God Tier recognition, may now even possibly be Good Tier)

Good Tier:
Solid operators with decent prestige, but lacking much flair (you'll find a lot of the ags firms here)...
- Cargill
- Mercuria
- Gunvor
- Bunge
- Louis Dreyfus
- Archer Daniels Midland

Average Tier:
The also-rans, forced into mid-table obscurity...
- Koch Industries
- IXM (Dreyfus' span-out metals arm; one to watch)
- Any other oil major with a trading operation

Bad Tier:
Mostly obscure names who may be good in specific areas but lack breadth of expertise...
- Noble Group (how the mighty have fallen)
- ED&F Man
- Targray
- Wilmar
- Arcadia
- Mabanaft
- Olam
- Hin Leong Trading (who?)

Shit Tier:
Your market-making curve shavers with little to no capitalisation / physical presence...
- Onyx
- VCMT
- DV
- Etc, etc, etc.

Dead & Dying Tier:
- Mandara (rumour has it is shutting-up shop)

Any I've missed, let me know!

 

Why are the shit tier companies shit? Is it due to the quality of their work/earnings? Is it due to the AUM? Is it do to their size?

Is it a death trap if you want to transition into one of them?

 
Most Helpful

You've more or less hit on all of key notes:

The work itself is more or less restricted to solely market-making / curve-shaving - not a lot of intellectual freedom.

There is potential in the space as a whole for superior earnings, however this tends to be concentrated almost exclusively among the founders of these shops - your day-to-day trader is unlikely to ever see the amounts the founders themselves are currently making.

In terms of AUM, they're also on the smaller side (albeit nothing to sniff at per se) - whereas a Glencore or a Trafigura (let alone a BP or a Cargill) will have many, many billions of dollars under management, these firms would be lucky to count a few hundred million.

They're not really considered sophisticated traders by the rest of the industry, so transitioning to one is very much dependent on what you ultimately want to do. Trade physical or run more complex strategies that take sizeable outright risk? Probably not the place for you.

"Work is the curse of the drinking classes" - Oscar Wilde
 

Certainly true that a "good" desk at any prop shop will be bringing in a few bucks of P&L after costs - an excellent desk will bring in tens of millions of dollars, however these are very few and far between (probs just one at each of the large energy market-makers). As I understand it, the rumours of Mandara shuttering aren't so much to do with poor performance (although they're nowhere near as profitable as they used to be), instead to do with the founder wanting to take it a little easier and wind down.

"Work is the curse of the drinking classes" - Oscar Wilde
 

Keep in mind that what product you trade at these companies matters a lot. ED&F Man in your 'bad tier,' is probably the biggest coffee trader of the bunch and that can be a much better seat than a book Traf/Glencore/Vitol are thinking about winding down. Even within your 'God tier,' there is a big difference between say copper at Glencore and alumina at Vitol (which judging by their website may be a thing of the past).

 

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